Coalition Asks Federal Government to Enhance Retirement Income Options for Canadians

December 6, 2018

The NIA is working with a coalition comprised of pension and seniors advocates to enhance Canada’s retirement income options, asking the Government of Canada to make collective longevity risk pooling arrangements available to Canadians. The coalition includes ACPMCARP, the CIACLHIACommon WealthPIAC, and notable pension expert, Keith Ambachtsheer.

Recognizing that Canadians require a robust range of income options to address longevity, the NIA sent a letter to the federal Minister of Finance and the Minister of Seniors recommending regulatory and legislative changes that could be enacted quickly, with no material cost to government.

Currently, there are barriers to extending retirement income options:

Firstly, employer or other group-sponsored collective solutions with defined contribution pensions or group RRSP/TFSA components are blocked from setting up variable payout life annuity-type group arrangements for their employees. To rectify this, the government can amend the income tax regulations that prevent the creation of new collective variable payout programs that allow pension plans to pool the assets of their retired DC members – providing economies of scale, better investment management and longevity risk protection.

Secondly, in its current form, the Income Tax Act (ITA) prevents individuals from purchasing a deferred life annuity with their registered savings with a benefit commencement date beyond age 71. We recommend amending the ITA so that that the maximum allowable commencement age for a deferred life annuity shifts from 71 to age 85. This would allow individuals to cost-effectively mitigate their longevity risk, while leaving the bulk of retirement savings to manage flexibly during the earlier part of retirement.

Addressing Demographic Changes

In 2016, seniors aged 85 and older made up 2.2% (or over 770,000) of the population; by 2031 as the oldest boomers reach 85 this cohort is set to increase to 4% (or over 1.25 million) and by 2051 as the youngest boomers reach this milestone it is set to increase to 5.7% (or about 2.7 million). As the letter states, “the rapid expected increase in seniors aged 85 and over requires a robust range of income options to address longevity in the very near future.”

These amendments could benefit many of the over 14 million working Canadians who will otherwise have inadequate lifetime income in retirement, and benefit the Canadian economy as a whole through the enhanced confidence and ability of seniors to personally support their living standards as they age.

The NIA’s Bonnie-Jeanne MacDonald, along with coalition members, met with officials at the Department of Finance last week to discuss these measures and looks forward to continued dialogue with the Government of Canada on the most effective ways to improve retirement income options for Canadians so that they can better retirement financial security as long as they live.

The letter has received coverage from Benefits Canada and builds on the thought-leadership of the NIA’s Director of Research – Financial Security, Bonnie-Jeanne MacDonald, in the C.D Howe’s report, Headed for the Poorhouse: How to Ensure Seniors Don’t Run Out of Cash before They Run Out of Time.

Read the letter here

The National Institute on Ageing (NIA) is a university-based think tank focused on leading cross-disciplinary research, thought leadership, innovative solutions, policies, and products on ageing. The NIA’s mission is to help governments, health care systems, pension plans, businesses, and Canadian families to best meet the challenges and opportunities posed to ageing Canadians and by an ageing demographic. Follow us on Twitter and sign up for our mailing list.

By Arianne Persaud, Manager of Advocacy, Government Relations and Stakeholders | National Institute on Ageing | Email:

Allan McKee